Skyward Specialty Insurance Group Reports Fourth Quarter 2024 Results
HOUSTON, Feb. 25, 2025 (GLOBE NEWSWIRE) -- Skyward Specialty Insurance Group, Inc. (Nasdaq: SKWD) ("Skyward Specialty" or the "Company") today reported fourth quarter 2024 net income of $14.4 million, or $0.35 per diluted share, compared to $29.3 million, or $0.74 per diluted share, for the same 2023 period. Net income for the year ended 2024 was $118.8 million, or $2.87 per diluted share, compared to $86.0 million, or $2.24 per diluted share, for the same 2023 period.
Adjusted operating income(1) for the fourth quarter of 2024 was $33.2 million, or $0.80 per diluted share, compared to $24.3 million, or $0.61 per diluted share, for the same 2023 period. Adjusted operating income(1) for the year ended 2024 was $126.7 million, or $3.06 per diluted share, compared to $80.8 million, or $2.11 per diluted share, for the same 2023 period.
Highlights for the fourth quarter included:
-- Gross written premiums of $388.4 million, an increase of $66.8 million,
or 20.8%, when compared to 2023;
-- Adjusted combined ratio(1) of 91.6%, including catastrophe losses of 2.2
points;
-- Return on equity of 16.3% for the year ended 2024 compared to 15.9% for
the same 2023 period;
-- Adjusted return on equity(1) of 17.4% for the year ended 2024 compared to
14.9% for the same 2023 period; and,
-- Book value per share of $19.79, an increase of 18% compared to December
31, 2023.
(1) See "Reconciliation of Non-GAAP Financial Measures"
Skyward Specialty Chairman and CEO Andrew Robinson commented, "We wrapped up another remarkable year for Skyward Specialty, delivering both outstanding underwriting results while growing gross written premiums at over 20% for the quarter and 19% for the full year, with six out of eight divisions growing double-digits over the prior year. Our 16.3% return on equity for the year was again an excellent outcome. Throughout 2024 we continued to thoughtfully diversify our product portfolio, strategically launching new units including Media Liability, Life Sciences, Mortgage and Credit, and Renewable Energy. Our focus and disciplined execution of our "Rule Our Niche" strategy, and the extraordinary efforts of my 600 plus colleagues made 2024 another impressive year for our Company, and we are confident that we have built the foundation that will propel us in 2025 and beyond."
Results of Operations
Underwriting Results
Premiums
------------- ------------- -------- -------------- -------------- --------
($ in thousands) Three months ended December 31, Twelve months ended December 31,
-------------------------------------- ----------------------------------------
% %
unaudited 2024 2023 Change 2024 2023 Change
Gross written
premiums $ 388,355 $ 321,605 20.8% $1,743,232 $1,459,829 19.4%
Ceded written
premiums $(117,328) $(107,488) 9.2% $ (619,654) $ (549,138) 12.8%
Net retention 69.8% 66.6% NM(1) 64.5% 62.4% NM(1)
Net written
premiums $ 271,027 $ 214,117 26.6% $1,123,578 $ 910,691 23.4%
Net earned
premiums $ 293,240 $ 224,932 30.4% $1,056,722 $ 829,143 27.4%
(1) Not meaningful
The increase in gross written premiums for the fourth quarter and year ended 2024, when compared to the same 2023 periods, was driven by double-digit premium growth primarily from our surety, programs, captives, global property & agriculture and transactional E&S underwriting divisions.
Three months ended Twelve months ended
Combined Ratio December 31, December 31,
------------------------ -------------------------
(unaudited) 2024 2023 2024 2023
----------- ----------- ------------ -----------
Non-cat loss
and LAE 60.5% 60.9% 60.6% 60.9%
Cat loss and
LAE(1) 2.2% 0.4% 1.7% 1.4%
Prior accident
year
development -
LPT(2) 4.2% (0.2)% 1.1% (0.2)%
------ ------ ------- ------
Loss Ratio 66.9% 61.1% 63.4% 62.1%
------ ------ ------- ------
Net policy
acquisition
costs 15.3% 13.4% 14.2% 13.0%
Other operating
and general
expenses 13.9% 16.3% 15.3% 16.3%
Commission and
fee income (0.3)% (0.1)% (0.6)% (0.7)%
------ ------ ------- ------
Expense ratio 28.9% 29.6% 28.9% 28.6%
------ ------ ------- ------
Combined ratio 95.8% 90.7% 92.3% 90.7%
------ ------ ------- ------
Ex-Cat Combined
Ratio(3) 93.6% 90.3% 90.6% 89.3%
====== ====== ======= ======
Adjusted
Underwriting
Ratios
----------------
Adjusted loss
ratio(2) 62.7% 61.3% 62.3% 62.3%
Expense ratio 28.9% 29.6% 28.9% 28.6%
------ ------ ------- ------
Adjusted combined
ratio(2) 91.6% 90.9% 91.2% 90.9%
====== ====== ======= ======
(1) Current accident year
(2) See "Reconciliation of Non-GAAP Financial Measures"
(3) Defined as the combined
ratio excluding cat loss and
LAE(1)
The loss ratios for the fourth quarter and year ended 2024 increased 5.8 points and 1.3 points, respectively, when compared to the same 2023 periods, primarily due to the net impact of prior accident year development related to the LPT. The fourth quarter and year ended 2024 were also impacted by higher catastrophe losses, primarily from Hurricane Milton in the fourth quarter of 2024 and Hurricanes Helene and Beryl in the third quarter of 2024. The improvement in the non-cat loss and LAE ratios for the fourth quarter and year ended 2024, when compared to the same 2023 periods, was driven by the business mix shift.
The expense ratio for the fourth quarter improved when compared to the same 2023 period primarily due to earnings leverage partially offset by the business mix shift. The expense ratio for the year ended 2024 increased slightly when compared to the same 2023 period, driven by the business mix shift.
The expense ratios for all periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our condensed consolidated statements of operations and comprehensive income.
Investment Results
Net Investment
Income
--------- -------- -------- -----------
Three months ended Twelve months ended
$ in thousands December 31, December 31,
------------------- ---------------------
(unaudited) 2024 2023 2024 2023
--------- -------- -------- -----------
Short-term
investments &
cash and cash
equivalents $ 3,998 $ 3,670 $17,643 $ 11,677
Fixed income 15,909 11,680 57,631 36,547
Equities 771 880 2,745 2,212
Alternative &
strategic
investments 52 (2,226) 2,667 (10,114)
------- ------ ------ -------
Net investment
income $ 20,730 $14,004 $80,686 $ 40,322
======= ====== ====== =======
Net unrealized
(losses) gains
on securities
still held $ (7,688) $ 8,736 $ 7,921 $ 11,130
Net realized
losses (2,721) (992) (1,665) (58)
------- ------ ------ -------
Net
investment
(losses)
gains $(10,409) $ 7,744 $ 6,256 $ 11,072
======= ====== ====== =======
Beginning January 1, 2024 we simplified the investment portfolio classifications to align with our strategy and the underlying risk characteristics of the portfolio. The prior period has been reclassified to conform to the current period presentation.
Net investment income for the fourth quarter and year ended 2024 increased $6.7 million and $40.4 million, respectively when compared to the same 2023 periods, primarily driven by (i) increased income from our fixed income portfolio and short-term investments due to higher yields and larger asset bases, and (ii) income from alternative and strategic investments compared to losses for the same 2023 periods, which were impacted by the decline in the fair value of limited partnership investments.
Stockholders' Equity
Stockholders' equity was $794.0 million at December 31, 2024 which represented a decrease of 0.4% when compared to stockholders' equity of $797.5 million at September 30, 2024. The decrease in stockholders' equity was primarily due to a decline in the market value of our investment portfolio partially offset by net income.
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